A Chinese factory near Shanghai is relying on a new breed of workers to maintain its competitive advantage in assembling electronics devices: small robots designed in Germany.
Suzhou Victory Precision Manufacture Co.'s chairman, Yugen Gao, said the days when the company drew its strength from China's cheap and hardworking employees are gone.
China's appetite for European-made industrial robots is rapidly growing, as rising wages, a shrinking workforce and cultural changes drive more Chinese businesses to automation. The types of robots favored by Chinese manufacturers are also changing, as automation spreads from heavy industries such as auto manufacturing to those that require more precise, flexible robots capable of handling and assembling smaller products, including consumer electronics and apparel.
At stake is whether China can retain its dominance in manufacturing.
"China is saying, 'we have to roboticize our industry in order to keep it,'" said Stefan Lampa, chairman of the robotics division of Kuka AG, a German automation firm and a supplier to Suzhou Victory.
The rush to buy robots comes in part because China's population of workers aged 15 to 59 is starting to shrink, forcing manufacturers to turn to automation. The United Nations estimates the number of the country's workers peaked in 2010 at more than 900 million and will fall below 800 million by 2050.
In addition, the average hourly labor cost-defined as wages plus benefits-of $14.60 in China's coastal manufacturing heartland has more than doubled as a percentage of U.S. manufacturing wages, from roughly 30% in 2000 to 64% in 2015, according to Boston Consulting Group, making the country less competitive as a destination for manufacturers.
China, in 2013, became the world's largest market for industrial robots, surpassing all of Western Europe, according to the International Federation of Robotics. In 2015, Chinese manufacturers bought roughly 67,000 robots, about a quarter of global sales, and demand is projected to more than double to 150,000 robots annually by 2018.
A Chinese factory near Shanghai is relying on a new breed of workers to maintain its competitive advantage in assembling electronics devices: small robots designed in Germany.
"China is saying, 'we have to roboticize our industry in order to keep it,'" said Stefan Lampa, chairman of the robotics division of Kuka AG, a German automation firm and a supplier to Suzhou Victory.
